“I am considering buying a Lumix DMC-FT1. I want to be able to still use Movie Maker on Windows. Will I be able to do so with AVCHD-Lite which the camera records video in?”
AVCHD-Lite, which is a subset of the AVCHD format popularized by hard disk camcorders from Sony, Panasonic, and Canon, uses h.264 video coupled with AAC audio for recording movies. Neither of these two codecs is directly supported by Windows Movie Maker in either Windows XP or Windows Vista. There are 3rd-party solutions that work with varying degrees of success in allowing you to work with AVCHD video in both versions of Movie Maker, but for the most part you are safer in assuming AVCHD and AVCHD-Lite will not work with either the XP or Vista versions of Movie Maker. If you are willing to convert the files to WMV or MPEG-2 before editing, you have more options, but generally speaking if you need to convert the AVCHD video before editing, you are better off starting with an editing program designed to edit AVCHD. You have several choices you can make as alternative editors.
If editing your movie in Windows Movie Maker is your highest priority, then choosing a different camera that records something other than AVCHD-Lite will be your best choice. If you want a digital camera with AVCHD-Lite recording capability, these are the most likely applications for editing:
Sony Vegas (Movie Studio Platinum, Movie Studio Platinum Pro, Vegas Pro)
Pinnacle Studio HD
Roxio Creator (2009 or newer)
Cyberlink Power Director (Ultra)
Nero (8 or newer)
Of the options I list above, Sony Vegas and Pinnacle Studio are the two I use regularly. I have tested the others and know they work with AVCHD files, but I prefer Sony Vegas and Pinnacle Studio over other choices.